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FirstEnergy Self-Dealing Scheme Not In The Best Interest of Potomac Edison/Mon Power Customers

9/22/2016

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...so sayeth "The P3 Group," aka PJM Power Providers Group, a non-profit group of competitive energy providers in the PJM region collectively owning over 84,000 megawatts of generation assets.  P3 is joined by the Electric Power Supply Association (EPSA), a national power providers' trade association.

These two groups popped up with a comment this week in the West Virginia Public Service Commission case regarding the issuance of a Request for Proposals for additional power supply for FirstEnergy's Mon Power and Potomac Edison subsidiaries.

The power providers say that the PSC has the authority to require FirstEnergy to issue an RFP for additional supply, and that only an RFP will ensure that Potomac Edison and Mon Power customers get the best price for new generation.
The best and most appropriate manner for this Commission to fully examine potential supply options would be with the use of a broad, competitively neutral RFP in which multiple suppliers could actively compete to meet the needs of West Virginia consumers. This would ensure that all available supply-side and demand-side resources are transparently reviewed in accordance with the state’s applicable rules and laws.
It doesn't take a rocket scientist to figure out that soliciting competitive bids for power will produce the lowest cost.  But if you're FirstEnergy, you don't care about costs for West Virginia electric customers, you only care about your holding company's balance sheet and stock price.

The power providers quoted a research paper prepared by the National Association of Regulatory Utility Commissioners and the Federal Energy Regulatory Commission as support for an RFP:
The first key issue for incremental resource procurements is the design of safeguards to prevent potential improper self-dealing by the utility. Because the utility may financially benefit from the selection of its own self-build offer or a proposal from an affiliate, safeguards are necessary to ensure that the process is not improperly tilted toward the selection of such offers.
The power providers join the West Virginia Consumer Advocate Division, the Staff of the Public Service Commission, WV Citizen Action Group, WV SUN, and West Virginia Energy Users Group in calling on the Public Service Commission to order FirstEnergy and its subsidiaries to issue and RFP that will definitively and transparently determine the cheapest resource for adding additional capacity.

What is it FirstEnergy is trying to hide with its opaque self-dealing insistence that the purchase of one of FirstEnergy's own resources is a "good deal" for West Virginians?  Sunshine is the best disinfectant!
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Community Participation in Urban Transmission Plans

9/21/2016

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Building new transmission is hard.  Building new transmission in urban areas is really hard.  Building new transmission will always foment opposition of some kind.  When the proposal affects urban areas, opposition will be loud, widespread, and fierce simply due to the number of people affected and the lack of space to construct new infrastructure in an already crowded landscape.

I came across an article recently that provides an opportunity to compare and contrast the actions of two different utilities attempting to build new transmission capacity for short distances in urban areas.

Dominion needs to build new capacity in the City of Alexandria, Virginia.  In preparation, it convened a "resident-led work group" and involved city officials in coming up with a plan that was least objectionable to the city and residents.  By doing this, the affected individuals were allowed to "buy in" to a solution that they felt they had some control over.  By giving the affected community a (real or imagined) voice in selecting a solution, opposition was ameliorated.
“In my view, Dominion looked really hard at the input this community had and listened to us around the table. I’ve served on a lot of task groups in Alexandria, but this is probably the best I ever sat on.”
It probably bears mentioning that the Dominion proposals included underground options.
And Mayor Allison Silberberg touted Dominion’s proposal for the fact that both options keep power lines underground.

“The good news is Dominion put forward two alternatives that are, in the proposal, both shown to be underground in Alexandria,” Silberberg said. “That’s really good, because that has been a top concern. We are awaiting more info from Dominion with regard to the specifics, and then once we get that specific info from them, we will be reconvening the work group, which has been excellent, to go over these considerations and the two options.”
Underground proposals rarely gather the same kind of fierce opposition as overhead proposals.  So, good for you, Dominion, for being flexible enough to compromise in order to realize the goals of the project, and not stubbornly insisting on a configuration the community would reject.

Now, let's compare this to FirstEnergy's current kerfuffle in New Jersey.  FE affiliate Jersey Central Power & Light (JCP&L) wants to build a 10-mile transmission upgrade in urban Monmouth County, NJ.  And they want to do it overhead, along a commuter train right-of-way.  FirstEnergy has not consulted with the community, but is insisting on building the project to its own specifications.  Opposition has been huge, swift, and fierce.  Community opponents number in the thousands.  Legislators have gotten involved.  And opposition to this particular transmission proposal has leaked over into FirstEnergy's proposal for a transmission only utility spin-off in the state.  What a mess FirstEnergy has made of this project and its community goodwill.  There's no going back from this.

By refusing to take community suggestion, and insisting that it cannot bury the project along the train right-of-way (although Dominion seems to be able to do just that in Virginia), FirstEnergy has done nothing but encourage opposition to dig in its heels and spread like wildfire.  The MCRP will never be built as currently envisioned by JCP&L.  FirstEnergy cannot bully or buy its way to community support for MCRP.

It's time for some new thinking at FirstEnergy's transmission headquarters.  In days gone by, it was accepted practice for a transmission utility to simply buy enough community support to get a project approved despite community opposition.  A utility never had to compromise when it could buy enough support to fool regulators and provide "political cover" for elected officials to claim that the community at large supported the proposal.  A utility simply presented its planned project as a fait accompli and ignored any community opposition.  The times, they are a changing.

Dominion has accepted that there is a better way to get transmission built without widespread community opposition that delays projects and increases their cost unnecessarily.  FirstEnergy is still banging its corporate head against a brick wall, refusing to change, and causing delays and unnecessary costs for projects it does manage to get approved through third-party advocacy.

There is a better way.  And it works.  If FirstEnergy wasn't so mismanaged, it would clean house in its transmission department and restock it with folks from Dominion.
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FirstEnergy's Coal Plant Purchase Has Cost You $130 Since 2013

9/20/2016

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That's according to a recent report from the Institute for Energy Economics and Financial Analysis (IEEFA).

Back in 2013, FirstEnergy, parent company of West Virginia distribution electric utilities Mon Power and Potomac Edison, came up with a bright idea to sell the Harrison Power Station to itself in order to raise cash to shore up its sagging balance sheet.  The plant was originally owned by FirstEnergy's competitive electricity supply company, Allegheny Energy Supply.  When owned by Allegheny Energy Supply, the plant was required to cover its own operating costs and make any profits by selling electricity into regional markets at a cost higher than its costs to produce the power.  However, market prices for electricity began falling due to the glut of cheaper gas-fired generators, making it harder and harder for Harrison to compete and turn a profit.  FirstEnergy proposed that Allegheny Energy Supply "sell" the plant to its West Virginia distribution affiliates at a jacked up price.  Once Mon Power and Potomac Edison owned the plant, their ratepayers would cover the cost of operating the plant, with electricity sold to the power market at going rates.  Except the going rate for power not only didn't produce any profit for the company's ratepayers, it didn't even cover its own operating costs.  Therefore, ratepayers of Mon Power and Potomac Edison have been subsidizing the cost of operating the plant at a loss since 2013.  The IEEFA estimates that the bill for ratepayers has climbed to $164 million.  That equals roughly $130 in extra electric bill charges for every customer of Mon Power and Potomac Edison, paid to cover the losses of operating the Harrison Power Station.

The IEEFA calculated the costs by using monthly reports of operating costs and market prices submitted to the Public Service Commission since 2013.  The IEEFA report reveals that the plant has produced a net cost (not benefit) to ratepayers for 28 out of 33 months.  And future prospects for the plant turning a profit remain dim.

FirstEnergy "still believes the plant is still a good deal for customers in West Virginia."
Todd Meyers, a spokesperson for MonPower, responded to questions about the study by saying the company believes the purchase benefits their customers and that it supports coal mining.

“It continues to provide reliable, low-cost power to our customers, and has preserved the opportunity to use more than 5 million tons of West Virginia produced coal annually, supporting hundreds of coal miners with solid, family-sustaining wages,” he said.
No word on whether Meyers still believes in Santa Claus, the Easter Bunny, and the Tooth Fairy as well, but I recently bumped into a leprechaun riding a unicorn and he told me that he does.

What are customers of Mon Power and Potomac Edison paying for?  Are they paying for the electricity they use, or are they paying to subsidize the coal industry?  Or are they instead simply subsidizing FirstEnergy's quarterly dividends paid to shareholders?

And guess what?  FirstEnergy has recently proposed selling ANOTHER of its competitive coal plants to Mon Power and Potomac Edison, citing the "model" of Harrison as the basis for another "good deal for customers in West Virginia."  We can't afford another one of FirstEnergy's "good deals!"

Heads up, West Virginians, we're going to need all hands on deck to stop this one!
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FirstEnergy Scheme to Pass Risk to West Virginians

8/6/2016

1 Comment

 
It's a risk hot potato.  While some states have deregulated electricity generation, others have not.  This makes for two different economic schemes for power plants.  In the deregulated scenario, plants compete with each other to sell power in electric markets.  A deregulated plant's income is derived from what it earns.  Earnings minus the cost of producing power equals profit.  But a regulated plant comes with a guaranteed profit.  Regulation takes the place of a competitive market to guarantee a generator a fair return (but no more).  A regulated plant is guaranteed to collect its cost of producing power, plus a fair return, to generate a set amount of profit.

When power market prices are high, deregulated plants earn more, because there is no regulated cap on the amount they can earn.  However, when power market prices are low, regulated plants earn more, because they are guaranteed to earn a certain amount over their cost of service.

A deregulated plant must cover its own operation costs, everything it earns above its cost to produce power is profit.  The owner of the plant shoulders all the risk of operating a plant that doesn't produce adequate profit.  If a plant cannot produce adequate profit, it fails economically and will likely close.

A regulated plant's operation costs are covered by ratepayers.  If the plant fails to produce an adequate profit margin, it can continue to operate because it is guaranteed to collect its operating costs and a small profit from ratepayers.  The ratepayers shoulder all risk of operating a plant that doesn't produce adequate profit.  It cannot fail economically because the ratepayers are there to make up any shortfalls between the cost to produce power, and the market price of that power.

It's all about who shoulders the economic risk. 

FirstEnergy used to love deregulated plants when power prices were high.  FirstEnergy made huge profits.  But then power prices started falling because generators that were cheaper to operate entered the market.  FirstEnergy's plants use coal for fuel.  New plants use cheaper natural gas for fuel.  Suddenly, FirstEnergy's deregulated coal-fired plants weren't economic any longer and couldn't cover their operating costs and still generate a profit.  In a pure market situation, these plants would close.  However, FirstEnergy has been looking for ways to transfer their deregulated plants into a regulated system, so they can continue to operate at a loss, courtesy of electric ratepayers.  FirstEnergy wants to transfer its risk from the company to ratepayers.
“We cannot put investors and our company at risk.”
So said FirstEnergy CEO Chatty Chuck Jones during a conference with the company's stockholders.  The company is planning to transfer its unprofitable Pleasants coal-fired plant into West Virginia's regulated system so that the company no longer has any risk associated with owning it.

If it's too risky for FirstEnergy's shareholders, it's too risky for West Virginia consumers.  We simply cannot afford to shoulder more risk for the Ohio power conglomerate.  Several years ago, FirstEnergy was successful in transferring its failing Harrison Power Station into West Virginia's regulated system.  West Virginians are now paying above-market prices to operate it, and sell excess power into the regional market.  Electric bills increased to cover the cost of owning and operating the plant (and paying for a whole bunch of maintenance on the plant that FirstEnergy deferred because the plant was losing money), plus a guaranteed profit for FirstEnergy.

Late last year, FirstEnergy filed its Integrated Resource Plan with the WV Public Service Commission.  The IRP is a long-range plan by the company detailing how it plans to acquire the generation resources necessary to meet the needs of West Virginia customers.  In its plan, it contended that buying another coal-fired power plant from its parent company was the best option for the customers.  Other parties intervened to argue against it, but the Commission ultimately approved the plan, noting that actually buying the coal-fired plant would necessitate another filing and review by the Commission and parties could argue against it at that time.

However, during the last coal-fired power plant purchase case for Harrison, the company contended that there wasn't time to issue a request for proposals to solicit power supply contracts from other generators that may compete with Harrison to produce the lowest cost for West Virginia ratepayers.  Therefore, Harrison stood alone as the only "solution."

Since the PSC neglected to require the company to solicit competitive bids for supply as part of its IRP, when is an RFP supposed to happen?  It can't happen during the IRP, because it's too early in the process.  But yet it can't happen when supply is needed, because it's too late in the process.

The Staff of the PSC and the West Virginia Consumer Advocate say the time is now.  They have jointly filed a request that the company be required to file RFPs for all future capacity and energy requirements above a certain threshold.  If West Virginians deserve to pay the cheapest prices for the power they need, then the company should be required to solicit competitive bids.

But the company doesn't want to.  FirstEnergy wants to sell its Pleasants power station to West Virginians without any competition.  That's not fair, or in the best interests of West Virginia ratepayers.  FirstEnergy is whining that it shouldn't have to bear the risk of its unprofitable Pleasants plant, because it still has "life left in it."
“Is it frustrating that we’re shutting down tens of thousands of megawatts of generation in our country that’s got life left in it because of the way this market is working?” Jones said. “That is very frustrating to me.”
While the plant may still have physical "life" in it, it doesn't have any economic "life" left.

West Virginia can't afford to bail FirstEnergy out of its bad economic decisions any longer.  Subsidizing FirstEnergy is "frustrating" to West Virginians, too, who sometimes have to make a choice between paying their electric bill and buying food.  Go peddle your lemon somewhere else, FirstEnergy.
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Potomac Edison Says No One Was Harmed by its Failure to Read Electric Meters in Maryland

6/24/2016

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Wahhhhhhhh.

I could end this blog post there, but I won't.

In May, a Maryland PSC administrative law judge proposed ordering Potomac Edison to change its meter reading frequency to monthly and fined the company a piddly $25K.

That followed an earlier proposed order issued in April, in which the same ALJ said no harm, no foul, and did nothing to punish the company for its transgressions.  The Commission pulled that proposed order and said it was "inadvertently issued."  I guess the judge didn't check with his boss before filing it.  Therefore, the revised order was issued a month later.

Now Potomac Edison and the Maryland Office of People's Counsel are appealing that decision, and basing it on the illegality of the ALJ's sudden change of heart.  The OPC doesn't think monthly meter reading is a solution to a problem that has since solved itself, and that ratepayers shouldn't have to shoulder the financial burden of this company's despicable actions (or lack of action, as the case may be).

You can find all the above filings here.

I guess OPC has a point, why should ratepayers pay to fix Potomac Edison's failure?  That's what happened in West Virginia, where meters are now read every single month.  Buh-bye incorrect estimated bills and huge "catch-up" bills.  Hello wacky bill schedule!  Since a reading must be done before a bill is issued, bills are never issued and due on the same day each month.  This presents a problem for folks who are only paid monthly, such as social security recipients, where they may receive two bills due within the same pay period.

But the anger is nowhere near that displayed across three states in the wake of Allegheny Energy's merger with Ohio dimwits FirstEnergy.  Perhaps if Maryland's Staff and OPC had paid attention to the West Virginia proceeding several years ago, they'd know that the meter reading failure was directly tied to the company's post-merger actions.  FirstEnergy insisted that Allegheny Energy toss out its perfectly good bill estimation methods designed to mesh with its alternate month reading schedule.  It had been working in WV for 30 years.  Instead, FirstEnergy insisted Allegheny adopt its own estimation routine, which was designed for missed reads in a system based on monthly reads.  That's right, while it may have worked fine for FirstEnergy subsidiaries that read meters monthly, it did NOT work for Allegheny's bi-monthly read system.  Combine that with FirstEnergy's "reorganization" of Allegheny's meter reading department and switch to "contract" meter readers who are paid less and must use their own vehicles, instead of a company-maintained motor pool, and disaster ensued. 

Whose fault was this?  FirstEnergy's!!

Only because of the scrutiny received in West Virginia (and to a lesser extent in Maryland, since the MD PSC was quite effective in preventing the customers from being heard during the heat of the moment) did the company take action to fix their mess.  Because Maryland waited so long to actually DO anything, the problems are long since over.

Now Potomac Edison says their actions didn't actually hurt anyone in Maryland because there's nothing in the record.  And there's nothing in the record because the MD PSC cancelled the public hearing it initially scheduled on this matter.  Then shoved the case off to mediation for years.  Then held a hearing.  Then issued two orders FIVE YEARS after the damage was done.  Justice delayed is justice denied, in this instance.

Potomac Edison also whines about the measly $25K fine the ALJ imposed.  $25K probably wouldn't even pay for two seats in the FirstEnergy CEO's special "luxury suite" at FirstEnergy stadium.  And yet this company has the nerve to cry like a baby over $25K.

So, hot potato passes to the MD PSC Commissioners, who seem to be responsible for the amended proposed order, so we'll assume it's to their liking.  Who knows, maybe Chatty Chuck will invite the Commissioners to watch a game in his luxury suite!  Woo Hoo!
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R.I.P. Big Transmission, We Hardly Knew Ye

6/2/2016

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I'm late for the funeral!  Ran across this article yesterday when searching for something totally unrelated, but it speaks so much truth, I couldn't dismiss it.  Back in September of last year, utility rag Fortnightly ran an article headlined, "The Rise and Fall of Big Transmission:  The alternatives may make more sense."  Author Steve Huntoon chronicles the big transmission building phase that was created by Congressional action to provide incredible financial incentives for Big Transmission.  In the Energy Policy Act of 2005, Congress tasked the Federal Energy Regulatory Commission with creating a system to award incentives to transmission builders, such as double digit returns, the ability to collect project costs in rates during construction, guaranteed recovery in the event a Big Transmission project was abandoned, and many more (I'm not going to list them all here because only utility rate geeks would understand them all without lengthy explanation).  Creating incentives to build more transmission was a Congressional knee-jerk to the 2003 northeast blackout.  Nevermind that a complicated, expansive transmission system was to blame for the blackout, industry lobbyists spun the blackout its clients created through mismanagement into a huge financial windfall.  And the Big Transmission building boom began.

Huntoon walks the reader through the bad ideas that sprang from utility greed, analyzes why many of them failed, and applies his analysis to the remaining Big Transmission bad ideas to demonstrate why they, too, must fail.

And he does it in an entertaining and easily understood fashion.  Big Transmission becomes a proper noun, a name for an entity that took on a life of its own for a brief period in utility history.  But, in the end, Big Transmission had to die.
Picture
The author explains six points that make Big Transmission fail:
Big Transmission never did and never will make sense. Let’s look at a half-dozen reasons why: 1) the laws of physics, 2) higher reliability risk, 3) stricter contingency limits, 4) lumpiness and investment risk, 5) rigidity of source and sink, and 6) better alternatives.
 Concise explanation of each point is in the article, so I won't belabor them here.

But the purist in me simply can't overlook a couple of glaring errors.  First, the Figure 2 national transmission overlay map is mislabeled.  Existing and New 765kV transmission have their colors reversed.  The Existing 765 system is red on the map, and the New 765 system is green (the legend in the upper right is incorrect).  It makes a great, big difference when studying the map to figure out which lines are new Big Transmission and which lines are incremental existing builds.  Second, the author places the PATH project on the wrong line in the Figure 1 Project Mountaineer Map.  He says, "PATH was essentially the western half of the #2 project in the overall Project Mountaineer plan."  No, PATH was the western half of the #3 project in the Project Mountaineer map.  PJM's original Project Mountaineer called for a Big Transmission line from the John Amos power station to the Deans substation in New Jersey.  PJM combined several proposals into the Frankenstein monster that became PATH, and then cut it off at Kemptown, with plans to build a separate Big Transmission project from Kemptown to Deans at a later date.

But, other than those two mapping boo-boos, the article gets the demise of the PATH project exactly right.  The demise of PATH has been wrongly portrayed by many people, with claims covering everything from reduced demand to coal plant retirements.  In his note 29, the author correctly notes that the demise of PATH was a combination of factors:
It is difficult to apportion the demise of PATH among reduced load growth, the Mt. Storm-Doubs alternative, new generation, and sophisticated statelevel opposition. However, it is fair to observe that reduced load growth had only postponed PATH in the past (three times). What was different in 2010 was the emergence of the Mt. Storm-Doubs  alternative, and the focus of a state regulator on that alternative.
That's right... every factor, except Mt. Storm-Doubs, simply delayed the PATH project.  Mt. Storm-Doubs, and the "sophisticated statelevel opposition's" overwhelming support of this alternative to change the political climate supporting the PATH project, is what killed PATH.  Better, cheaper alternative that the people support?  It's the winning PATH of least resistance!

The realities of the "need" for PATH, and its opposition, merely delayed the project long enough for Dominion Virginia Power to step onto the stage with its proposed rebuild.  But even that wasn't simply about a better idea... the Mt. Storm Doubs line's existing towers were built out of a certain kind of steel that had not stood the test of time.  The tower bases were deteriorating and patchwork fixes were no longer effective.  The towers needed to be replaced before they started falling down.  And while they were replacing the towers, everything else got an upgrade that increased the line's thermal capacity 65% (allowing it to carry more power).  Dominion smartly took advantage of the PATH debacle to get its line rebuilt with minimal opposition, and even the outright support of affected landowners.

Would this situation repeat itself to kill other Big Transmission proposals?  Probably not.  But it does support the idea that incremental transmission projects and rebuilds are much easier to build than Big Transmission.  So, why does the utility industry continue to propose and/or support Big Transmission?  Because it comes with Big Profits and they're willing to risk protracted planning and permitting processes in order to increase their profits.  It's not about building reliability, economic benefits for consumers, or even "cleaner" power...  and all the risk of Big Transmission ends up on the backs of consumers.  What's not to like for them?  The facts in this article -- Big Transmission must fail.

There's even some hard truth about the last of the Big Transmission projects that have yet to realize they're dead.  Clean Line Energy came up with its idea to build thousands of miles of Big Transmission to ship renewables from coast to coast in 2009, when Big Transmission was in its heyday.  But, unlike utility proposals where risk and cost is shouldered by ratepayers, Clean Line has spent millions of dollars of private investment cash to keep its idea alive.  Once Clean Line gives up, its investors lose everything.  There is no federal guarantee to recover sunk costs on speculative, market based Big Transmission.  And Clean Line, itself, will die along with its projects, and its executives currently living high on the hog of private investor cash, will be in the unemployment line.  This is what keeps Clean Line on life support long after it's been pronounced brain dead.  And here's why Clean Line will never happen:
But certainly when Big Transmission is dependent upon market conditions the lumpiness and risk factors are all the more daunting. Big Transmission somehow needs to bring together generation resources and market demand – to the exclusion of alternatives – to forge a level of commitment that will last for many years. That’s a prerequisite for financing. So the entities at each end need to perceive such a compelling business proposition that they will forego other alternatives and cast their fate with Big Transmission. That’s a tough sell.

FERC requires that utilities interconnect all new generation. So a new generator is assured of being able to interconnect its project to the utility serving the territory it is located in; the issue is solely how much money and time it will take for the interconnection. Given this legally assured ability to access the grid through the resident utility, market-based Big Transmission is effectively competing with that utility and thus must offer substantial value added.
And there is no value added by a Clean Line.  Clean Line stupidly demonstrated just this point to the City of Hannibal, Missouri, earlier this year with its chart of wind options for the city.  The Clean Line prepared (and tweaked) chart showed that wind delivered over the existing incremental transmission system was just as cheap as wind delivered over a "clean" line.

Why would any company buy capacity from a risky new transmission line when existing lines are just as cheap?  This probably explains why Clean Line has no customers.  And without customers, Clean Line's Big Transmission will also fail.
1 Comment

Would You Trust This Guy?

5/23/2016

2 Comments

 
James V. Fakult needs to work on his communication skills.

I get lots of notices about new transmission proposals, but this one was so poorly done, it made me laugh out loud.  According to this article, liespotting is an art.  Watch out for number 6 when reading the quotes from Fakult.
Liars overemphasize their truthfulness. “To tell you the truth…” “Honestly…” “I swear to you…” Oh, if only it were so! When people use these bolstering statements to emphasize their honesty, there’s a good chance they are hiding something. Learning to baseline someone’s normal behavior is important in situations such as this:  You want to listen for normal or harmless use of such phrases. There’s no need to add them if you really are telling the truth, so be on guard.
Now listen to Fakult:
"The growth has been in some fits and starts, but we're at a point now where this is an essential project to continue to provide, really, the type of service, the level of service, that our customers expect from us," Fakult told the Asbury Park Press. "It reinforces the system in that area. It allows us to, again, provide better, more reliable, resilient service."
Really, James?  Really?  What was the purpose of sticking that word into your statement, except to bolster your statement that the people really need your project.  And you repeated yourself there at the end, hoping it would give more credibility to your proposition.  Clearly, he doesn't even believe it himself.  Maybe if he repeats it a couple dozen more times it will become true?
"The time is now," Fakult said. "It just needs to be done now."
Perhaps Fakult is attempting to tread carefully, since a substantially similar project was attempted many years ago but failed due to public opposition.
Nearly 16 years ago, the utility scrapped plans for a 6.5-mile transmission line, to be run on 60-foot high steel poles, along the railroad tracks from Matawan to Middletown, after intense community opposition. Residents and some town officials, fearing a reduction in property values and worried about health risks, fought the project for a decade.

"To me, it is nothing but a resurrection of precisely the same plan that we fought and stopped," said state Assemblywoman Amy Handlin, R-Monmouth, a vocal opponent years ago. "It's the phoenix rising from the ashes, it's the ghost of battles past. It's not different."
I don't think the people have forgotten.  Looks like opposition will be swift and fierce.  So, what's changed this time?
This time, the utility proposes to run the wires atop slender single poles that average 140 feet tall rather than bulky towers used in the past, spokesman Ron Morano said.
Who says the public likes monopoles any better than they like lattice towers?  Did AEP tell you that?
AEP isn't the public.  Truly aesthetic transmission is underground.  You should have started there, James.  Since everyone (214,000 ratepayers, according to the article) is going to benefit from the project, everyone should pay the increased cost of undergrounding it so it doesn't become a hazard or a burden to adjacent landowners.  You're always going to have opposition when you propose that a few should sacrifice themselves for the many.  Beneficiary pays.
The use of the NJ Transit corridor, which is already designated for public use and has existing electric infrastructure, as well as the slimmer monopoles, will help to minimize the disruption on the community, Fakult said.
Transmission lines are NOT like Lay's potato chips.  Just because someone lives near invasive infrastructure does NOT mean they want or deserve more of it.  Look at it this way -- those folks living in close proximity to existing infrastructure have already paid their dues to society.  Isn't it someone else's turn?
Morano, the JCP&L spokesman, said the utility follows all safety and heath guidelines and will have an electromagnetic fields expert available at open house sessions. "We are successfully building transmission lines in other (areas) without any issues," she said.
EMF health-related issues are entirely perceptual.  Your "experts" and selected 30 year old studies don't convince anyone.  How about putting your money where your expert's mouth is, FirstEnergy?  How about offering the landowner a written guarantee to cover the health care costs of any individual who can prove their illness was related to living in close proximity to your transmission line?  Your wallet clearly doesn't believe your "science."

So, next FirstEnergy plays its trump card to claim that PJM has determined the project to be necessary.
PJM Interconnection, the organization that oversees the electric grid in 13 states and Washington D.C., has identified the Monmouth County Reliability Project as a necessary project to reduce the length and frequency of outages in Monmouth County, the utility said.

If not built, "over the long term, you start to see issues emerge," Fakult said. "When you start to see peaking conditions, you just don't have the contingencies that you need to run the system reliably."
PJM?  The organization that "answers to no one?"  But your press release said YOU were proposing it, FirstEnergy.  Which is it?  Who first "identified" this project as a necessity?  Was it PJM, or was it FirstEnergy, looking to "energize" its profits by building transmission it believes necessary to meet future demand:
As noted in the fact sheet, Energizing the Future is a transmission initiative through 2017 that involves upgrading and strengthening the grid to meet the future demands of customers and communities. Key factors driving that investment include enhancing system reliability by replacing existing equipment with advanced technologies; meeting projected load growth; and reinforcing the system in light of power plant deactivations, the fact sheet added.
Fakult thinks he can do things differently this time:
The company plans to hold three open house events in neighborhoods near the proposed project to share information with the public and gather feedback. The company also is setting up a website at www.monmouthreliability.com.
You're going to hold three events guaranteed to thoroughly piss off the communities and give the opposition an opportunity to meet and greet and build mass, FirstEnergy?  You've really learned nothing at all over the years, have you?

Your talk about "need" really isn't convincing.  Did the utility "need" this transmission project the first time it was proposed, 16 years ago?  Obviously not, since it never happened and the lights still come on in those communities when people flip the switch.  Adding words like "really" this time isn't going to help you.

Once again, FirstEnergy puts its cart before its horse by presenting a community with a transmission project as a fait accompli.  Presuming the project is "needed" and it's only a matter of how to build it and where to put it will never be accepted at face value by a community.  First, you have to convince them that a need for something exists, and then you consult with the community to determine an acceptable solution.

That's true "community consultation."  Really.
2 Comments

Voting for Transparency

5/10/2016

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Hurray, hurray, it's election day!

Maybe now the phone will stop ringing incessantly with recorded voices urging me to vote for the candidate with the most corporate money in their treasure chest.  And maybe now my mailbox won't be stuffed with repetitive political cards urging me to vote for the candidate with the most corporate money in their treasure chest.  Because, you know, corporate money rules the political world.

But there will be other things for certain people to vote on, even after election day.  Corporate shareholders still get to vote on proposals at upcoming company annual meetings.  In addition to company-sponsored proposals such as executive compensation or lowering the threshold for approval of "certain" proposals, shareholders can vote on their own proposals about how the company they own is run.

FirstEnergy shareholders will be voting on May 17.  Of course, the company recommends that its shareholders vote for all the company's proposals, and AGAINST all the proposals of its shareholders.  This pretty much never changes from year to year.  The only thing that changes is the proposals that shareholders make which are consistently voted down at annual meetings.

This year, shareholders have proposed that FirstEnergy prepare and issue a report disclosing the company's lobbying expenditures, particularly direct and indirect lobbying and grassroots lobbying communications.  Direct and indirect lobbying includes payments to tax-exempt organizations that write and endorse model legislation.  "Grassroots" lobbying communications include company advertising advising the general public how they should think about certain legislation, and how they should participate in their own governance.

The Nathan Cummings Foundation believes FirstEnergy's lobbying efforts constitute a risky and ineffective strategy.  It's not how much of the shareholders' money FirstEnergy pumps into its lobbying efforts (well, assuming FirstEnergy doesn't have any accounting "accidents" and charge the lobbying costs to ratepayers instead of shareholders) it's that they suspect FirstEnergy's lobbying efforts are hurting shareholders interest in the health of the company.  Now, why would FirstEnergy engage in lobbying that hurts its financial position?

FirstEnergy's management believes "that it has a responsibility to participate in the legislative, regulatory and political process. Sharing its views and educating officeholders, regulators, community and business leaders, and the public on key issues helps your Company promote effective government and the interests of key stakeholder groups including our shareholders, employees and the communities we serve. By engaging with elected officials, regulators, community and business leaders, and other decision makers, your Company strives to conduct its business as transparently as possible to serve customers effectively and help build public trust."

Participate?  It's not just about "sharing its views," it's about using money and political power to prevent voters from "sharing their views."  It's about hiding behind trade associations and totally made up groups, such as 
Utility Air Regulatory Group (UARG), in order to influence government processes.  It's about using its public voice to disseminate political propaganda to its customers.

But, never fear, these shareholder proposals are always voted down.  Shareholders never truly revolt and vote with their money by dumping the corporate stock of a company who continues to ignore their wishes.  Nobody is brave enough to have real convictions when it comes to their wallet.  

​Greed rules all in a voting process, whether at the voting booth or an annual shareholder meeting.



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Maryland Judge Fines Potomac Edison For Not Reading Electric Meters

5/7/2016

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On Thursday, Maryland Public Service Commission Administrative Law Judge Dennis H. Sober fined Potomac Edison $25,000 for its 2011-2012 failure to read electric meters according to its tariff.

It's been a long time since Potomac Edison's outrageous billing failure caused its customers to receive astronomical bills resulting from the company's neglect of its duty to read meters in a timely fashion.  The West Virginia PSC investigation and subsequent hearing into the same problem resulted in a requirement that the company switch to monthly meter readings back in 2014.

The judge's Proposed Order in Maryland also requires Potomac Edison to increase its meter reading frequency to monthly in that state.

The judge found:
that PE’s initial acknowledgment of the substandard meter reading history was an appropriate and an accurate reply to the Commission's correspondence. Its later reversal on the issue of accepting some responsibility for the substandard performance is troubling and counterproductive for the proper resolution of these issues.
And
It is not a legitimate excuse to blame the weather (which PE can’t control) or the staffing issues it faced (which it can control), as neither of these factors is unique to PE as an electrical utility, nor are they unusual or unknown factors.

PE is obligated to make its decisions as to how to manage and staff its Meter Reading Division in a manner and to a level of industry standards, and I find that PE failed to do so during the time period under review.

I find that the facts demonstrate that the meter reading rate of Potomac fell below an acceptable level of reading for the years 2011-2012, and that was in violation of its tariff and of good engineering practices as required of a utility. I conclude that the failings were due to an inadequate level of staffing and of a failure to have adequate contingency plans in place when PE faced unusual weather events.

The Maryland PSC staff recommended a penalty of $300,000, based on PE's cost of missed meter readings.  Why should the company collect from ratepayers for services it never performed?  While this makes perfect sense to me (and probably to you as well), the judge found that "the basis for the formulation of the financial penalty Staff would impose is not valid and has no basis upon which to rely."  Therefore, the judge pulled a number out of nowhere to impose a much lower, arbitrary penalty of $25,000.  Even a $300,000 penalty is nothing more than a minor annoyance to a company with annual revenue in the neighborhood of $15B.  A penalty of $25,000 is an insult to ratepayers who were harmed by Potomac Edison's failure to abide by its tariff.  But, hey, it's more than the WV PSC fined the company for the same practices, which was a big fat goose egg.  Instead, the WV PSC ordered monthly meter reading at an additional cost to ratepayers of more than $7M annually.  It remains to be seen if Potomac Edison will file a new base rate case in Maryland in order to collect the additional costs it faces for increasing its meter reading to a monthly basis.  Potomac Edison currently enjoys an 11.9% return on equity in Maryland, a rate much higher than that allowed in neighboring states.  A new base rate filing will most likely result in a new, much lower ROE.  In fact, PE would probably lose money in such a deal as the lower ROE would cost them more than they could make collecting a higher cost for monthly meter reading.  But, never fear, Marylanders, FirstEnegy will probably do something like apply for a supplemental rate rider to cover the cost of additional meter reading without having to file a base rate case.  This ain't over until FirstEnergy takes even more money out of your pocket...

And speaking of... the judge's Proposed Order isn't final until June 7, and only then if no party files an appeal.  Do you think Potomac Edison will appeal the Proposed Order, since all its costs to do so come out of ratepayer pockets?

Justice sure is funny in a regulated environment, isn't it?
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FirstEnergy and AEP Flame Out in Ohio; Seek to Strap Ratepayers in Other States

5/3/2016

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Well, that was completely unsurprising.  FERC said the Power Purchase Agreements requiring captive Ohio distribution company customers to purchase generation from AEP and FE merchant generators don't pass the sniff test.

Even though the Public Utilities Commission of Ohio (PUCO) approved the deals, FERC rules about affiliate transactions cannot be bypassed (or politically influenced).

FERC rescinded previously granted waivers to allow AEP & FE to engage in affiliate transactions without review.  The waivers were granted when the companies spun off their regulated generators into merchant companies because the generation companies no longer had captive customers.  In that case, any deals between regulated distribution affiliates and unregulated generation affiliates would have been subject to market forces.  If the deals were too expensive, then customers could bypass the charges and switch to another, cheaper, generator.  But AEP & FE made the mistake of placing the cost burden of these PPAs on captive distribution customers, and not free choice generation customers.  Because then the customers would choose a cheaper generator.

Contrary to some of the articles I've read, the FERC decision does not reverse the PUCO's decision to allow the cost of the PPAs to become the responsibility of captive distribution customers.  It simply rescinds its prior waiver of review of the PPA itself.  The companies are now free to submit the PPAs to FERC for review.  If FERC approves them, then everything can proceed as planned.  However, it is unlikely that FERC will approve the PPAs because they allow AEP & FE to charge their captive customers to subsidize their shareholders profits.

So, what's a greedy and poorly managed utility to do?  FE initially wanted to pretend that its PPA will be found just and reasonable by FERC.  How much money and political influence would THAT require?  Remember, the cost of civic and political activities is the financial responsibility of shareholders, not ratepayers.  The cost of buying FERC is likely to obviate any temporary profits that may come from an 8-year PPA.  They're not a cheap date like state utility commissions.  However the company has apparently crunched the numbers and come to its senses.  FE is now attempting to bypass FERC review by doing away with the PPA, while still collecting the charge it would levy on Ohio consumers.  AEP is being a little more realistic, if not downright arrogant.  AEP's CEO soothed investor agitation by claiming it will make the Ohio legislature re-regulate generation so that it may collect the cost of service, plus a return, for its Ohio generators.  This would effectively end retail generation choice in Ohio.  Is legislation that will cost Ohio electric ratepayers more money really that easy for AEP that it simply needs to want it and wave its magic wand?  Time will tell.

Meanwhile, FirstEnergy wants to make its regulated Mon Power and Potomac Edison affiliates in West Virginia purchase another non-competitive generator from its competitive generation affiliate.  It's just like re-regulating generation in Ohio, but the legislative work is already done.  And FirstEnergy has already successfully pulled off a similar affiliate transaction a couple years ago when its competitive generation affiliate "sold" the Harrison Power Station to regulated Mon Power and Potomac Edison.  West Virginia electric consumers have already bailed out one of FirstEnergy's uncompetitive generators, what's one more?  This time, FE wants to "sell" its Pleasants Power Station to Mon Power and Potomac Edison.  But Mon Power already owned an 8% share of Pleasants, which it "sold" to FE Generation as part of the Harrison deal.  Now FE Generation wants to sell the same power station back to Mon Power.  Pleasants is like the FE hot potato, bought and sold among affiliates as necessary to generate cash.  The only fly in the ointment this time is that FE put a price on Pleasants when it "sold" it last time.  I'm sure the cost to Mon Power can't be more than what FE Generation paid them for the plant a couple years ago.  It's not like the price of antique coal generation stations has shot up in the past few years.  But, never fear, I'm sure FE can pay the right people to convince the WV PSC that the plant is as valuable as the amount of cash FE needs to raise from its sale.

And don't forget... all this stashing of competitive generators into regulated companies is only temporary.  If power prices recover and these generators once again become competitive, AEP & FE will find a way to "sell" these plants back to their competitive generation companies.  It's all about shareholder return and making as much money as possible.... and ratepayers are the source of investor owned utility profits.  The idea that regulation protects consumers in the absence of competition is nothing more than a fig leaf.  Utilities that operate in both a competitive and regulated environment will continue to shift assets around to generate the most profit for their shareholders.
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    About the Author

    Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
    In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.

    About
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

    StopPATH Blog continues to bring you energy policy news and opinion from a consumer's point of view.  If it's sometimes snarky and oftentimes irreverent, just remember that the truth isn't pretty.  People come here because they want the truth, instead of the usual dreadful lies this industry continues to tell itself.  If you keep reading, I'll keep writing.


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